Edgar Filing: DIVIDEND & INCOME FUND

dni.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act File Number: 811-08747

DIVIDEND AND INCOME FUND

(Exact name of registrant as specified in charter)

11 Hanover Square, 12th Floor New York, NY	10005
(Address of principal executive offices)	(Zip Code)

John F. Ramírez, Esq.

Dividend and Income Fund

11 Hanover Square

New York, NY 10005

(Name and address of agent for service)

Registrant's telephone number, including area code: 1-212-785-0900

Date of Fiscal Year End: December 31

Date of Reporting Period: March 31, 2015

		DIVIDEND AND INCOME FUND
		SCHEDULE OF PORTFOLIO INVESTMENTS
		March 31, 2015
		(Unaudited)

Shares			Value
		Common Stocks (111.01%)
		Agricultural Chemicals (3.32%)
	15,000	Monsanto Company	$	1,688,100
	45,000	Potash Corporation of Saskatchewan Inc.		1,451,250
	35,000	The Mosaic Company		1,612,100
				4,751,450

		Aircraft Engines & Engine Parts (0.54%)
	55,000	Rolls-Royce Holdings PLC		778,098

		Beverages (1.20%)
	18,000	PepsiCo, Inc. (a)		1,721,160

		Biological Products (1.35%)
	12,100	Amgen Inc. (a)		1,934,185

		Cable & Other Pay Television Services (2.98%)
	32,500	Rogers Communications Inc.		1,088,100
	21,400	Time Warner Inc. (a) (b)		1,807,016
	20,000	Viacom Inc.		1,366,000
				4,261,116

		Cigarettes (1.47%)
	28,000	Philip Morris International, Inc. (a)		2,109,240

		Commercial Banks (2.30%)
	30,000	Australia and New Zealand Banking Group Limited (e)		839,731
	149,000	Banco Santander (Brasil) S.A.		657,090
	60,000	Westpac Banking Corporation (c)		1,794,600
				3,291,421

		Computer & Office Equipment (1.01%)
	9,000	International Business Machines Corporation		1,444,500

		Computer Communications Equipment (2.74%)
	85,000	Cisco Systems, Inc. (a) (b)		2,339,625
	70,000	Juniper Networks, Inc.		1,580,600
				3,920,225

		Conglomerate (1.00%)
	35,000	Loews Corp.		1,429,050

		Construction, Mining & Materials Handling Machinery & Equipment (0.65%)
	13,500	Dover Corp. (a) (b)		933,120

		Crude Petroleum & Natural Gas (0.50%)
	75,000	LinnCo, LLC		717,750

		Deep Sea Foreign Transportation of Freight (0.64%)
	50,000	Seaspan Corp. (a) (b)		912,000

		Dolls & Stuffed Toys (0.40%)
	25,000	Mattel, Inc. (a)		571,250

		Electric Services (2.59%)
	70,000	Calpine Corp. (a) (c)		1,600,900
	47,500	Southern Company (a)		2,103,300
				3,704,200

		Electronic & Other Electrical Equipment (4.55%)
	26,000	Emerson Electric Co.		1,472,120
	111,900	General Electric Company (a) (b)		2,776,239
	80,000	Koninklijke Philips N.V.		2,267,200
				6,515,559

		Electronic & Other Services Combined (2.51%)
	51,500	Exelon Corp. (a)		1,730,915
	35,000	PG&E Corp. (a)		1,857,450
				3,588,365

		Farm Machinery & Equipment (2.30%)
	37,000	AGCO Corporation (a)		1,762,680
	17,500	Deere & Company (a) (b)		1,534,575
				3,297,255

		Finance Services (0.98%)
	18,000	American Express Company		1,406,160

		Fire, Marine & Casualty Insurance (4.03%)
	20,000	Ace Ltd. (a)		2,229,800
	70,000	W.R. Berkley Corporation (a) (b)		3,535,700
				5,765,500

		Food & Kindred Products (0.81%)
	25,000	Campbell Soup Co. (a) (b)		1,163,750

		Hospital & Medical Service Plans (1.84%)
	17,100	Anthem, Inc.		2,640,411

		Hotels & Motels (1.11%)
	29,000	Las Vegas Sands Corp.		1,596,160

		Insurance Agents, Brokers & Service (1.35%)
	32,500	Catamaran Corporation (c)		1,935,050

		Investment Advice (4.61%)
	64,000	Apollo Global Management, LLC		1,382,400
	55,000	The Blackstone Group L.P. (a)		2,138,950
	200,000	Fortress Investment Group LLC		1,614,000
	37,000	Invesco Ltd.		1,468,530
				6,603,880

		Leather & Leather Products (0.87%)
	30,000	Coach, Inc. (a) (b)		1,242,900

		Men's & Boys' Furnishings, Work Clothing, & Allied Garments (1.01%)
	11,000	Ralph Lauren Corp.		1,446,500

		Metal Mining (1.01%)
	35,000	Rio Tinto plc ADR		1,449,000

		Mining Machinery & Equipment (0.75%)
	27,500	Joy Global Inc.		1,077,450

		Miscellaneous Food Preparations & Kindred Products (1.08%)
	20,000	McCormick & Company, Incorporated		1,542,200

		Motor Vehicle Parts & Accessories (1.82%)
	25,000	Honeywell International, Inc. (a) (b)		2,607,750

		Motor Vehicles & Passenger Car Bodies (5.04%)
	20,000	Daimler AG (a) (b)		1,932,100
	120,000	Ford Motor Company		1,936,800
	41,500	General Motors Company (a) (b)		1,556,250
	35,000	Volkswagen AG		1,793,750
				7,218,900

		National Commercial Banks (3.44%)
	20,200	Capital One Financial Corporation (a) (b)		1,592,164
	39,000	U.S. Bancorp		1,703,130
	30,000	Wells Fargo & Company		1,632,000
				4,927,294

		Office Furniture (0.81%)
	110,000	Kimball International Inc. Class B		1,152,800

		Paperboard Containers & Boxes (0.51%)
	17,000	REXAM PLC		728,960

		Petroleum Refining (3.26%)
	17,000	Exxon Mobil Corp.		1,445,000
	20,500	Phillips 66 (a) (b)		1,611,300
	32,500	Western Refining, Inc.		1,605,175
				4,661,475

		Pharmaceutical Preparations (5.64%)
	23,100	Johnson & Johnson (a)		2,323,860
	40,300	Merck & Co., Inc. (a)		2,316,444
	37,924	Pfizer Inc.		1,319,376
	42,900	Sanofi ADR (a)		2,120,976
				8,080,656

		Pipelines (1.52%)
	45,000	Enbridge Inc. (a)		2,182,500

		Plastic Mail, Synth Resin/Rubber, Cellulose (0.52%)
	50,000	Rayonier Advanced Materials Inc.		745,000

		Printed Circuit Boards (0.81%)
	82,500	Kimball Electronics, Inc. (c)		1,166,550


		Radio & TV Broadcasting & Communications Equipment (1.52%)
	45,600	NTT DOCOMO, INC.		794,808
	20,000	QUALCOMM, Incorporated (a)		1,386,800
				2,181,608

		Radiotelephone Communications (1.03%)
	45,000	Vodafone Group PLC		1,470,600

		Railroads, Line-Haul Operating (3.59%)
	108,500	CSX Corp. (a)		3,593,520
	15,000	Norfolk Southern Corp.		1,543,800
				5,137,320
		Real Estate (0.82%)
	50,000	NorthStar Asset Management Group Inc.		1,167,000

		Retail - Department Stores (1.56%)
	28,600	Kohl's Corporation		2,237,950

		Retail - Eating Places (1.26%)
	18,500	McDonald's Corp. (a)		1,802,640

		Retail - Family Clothing Stores (1.21%)
	40,000	The GAP, Inc. (a)		1,733,200

		Retail - Variety Stores (1.11%)
	19,400	Wal-Mart Stores, Inc.		1,595,650

		Security Brokers, Dealers & Flotation Companies (1.14%)
	33,000	Waddell & Reed Financial, Inc.		1,634,820

		Semiconductors & Related Devices (1.20%)
	40,000	Altera Corp.		1,716,400

		Services - Business Services (1.21%)
	83,000	The Western Union Company (a)		1,727,230

		Services - Medical Laboratories (2.74%)
	14,000	Laboratory Corporation of America Holdings (a) (b) (c)		1,765,260
	28,000	Quest Diagnostics Incorporated		2,151,800
				3,917,060

		Services - Miscellaneous Repair Services (0.02%)
	756	Aquilex Holdings LLC Units (d)		26,935

		Services - Prepackaged Software (2.61%)
	55,000	CA, Inc. (a) (b)		1,793,550
	45,000	Oracle Corporation (a) (b)		1,941,750
				3,735,300

		Soap, Detergent, Cleaning Preparations, Perfumes, Cosmetics (2.12%)
	18,000	The Procter & Gamble Company (a)		1,474,920
	37,500	Unilever N.V.		1,566,000
				3,040,920

		Specialty Cleaning, Polishing and Sanitation Preparations (1.31%)
	17,000	Clorox Co. (a)		1,876,630

		Surgical & Medical Instruments & Apparatus (2.36%)
	27,000	Baxter International Inc. (a)		1,849,500
	10,700	Becton, Dickinson and Company (a)		1,536,413
				3,385,913

		Telephone Communications (3.72%)
	43,000	CenturyLink, Inc. (a) (b)		1,485,650
	150,000	Orange ADR		2,401,500
	100,000	Telefonica, S.A.		1,435,000
				5,322,150

		Title Insurance (1.62%)
	65,000	First American Financial Corporation		2,319,200

		Water Transportation (0.80%)
	23,800	Carnival Corp. (a)		1,138,592

		Wholesale - Electronic Parts & Equipment (0.99%)
	32,000	Avnet, Inc.		1,424,000

		Wholesale - Groceries & Related Products (1.19%)
	45,000	Sysco Corp. (a)		1,697,850

		Wholesale - Industrial Machinery & Equipment (1.01%)
	20,000	MSC Industrial Direct Co., Inc.		1,444,000

		Total common stocks (Cost $137,464,651)		158,953,758

Principal
Amount
		Corporate Bonds and Notes (1.99%)
		Cable & Other Pay Television Services (0.36%)
	500,000	CCO Holdings LLC, 7.00%, 1/15/19 (a)		521,250

		Cogeneration Services & Small Power Producers (0.34%)
	450,000	Covanta Holding Corp., 7.25%, 12/1/20 (a)		480,375

		Electric Services (0.40%)
	517,335	Elwood Energy LLC, 8.159%, 7/5/26 (a)		576,829

		Hospital & Medical Service Plans (0.19%)
	250,000	Health Net, Inc., 6.375%, 6/1/17 (a)		268,125

		Oil & Gas Field Exploration Services (0.11%)
	169,000	CGG-Veritas, 7.75%, 5/15/17 (a)		161,395

		Special Industry Machinery (0.37%)
	500,000	Novelis, Inc., 8.375%, 12/15/17 (a)		523,125

		Wholesale - Electronic Parts & Equipment, NEC (0.22%)
	299,250	Brightstar Corp., 9.50%, 12/1/16 (e)		314,212

		Total corporate bonds and notes (Cost $2,714,323)		2,845,311

Shares
		Real Estate Investment Trusts (4.97%)
	34,500	HCP, Inc.		1,490,745
	22,500	Health Care REIT, Inc.		1,740,600
	100,000	New Residential Investment Corp.		1,503,000
	50,000	NorthStar Realty Finance Corp.		906,000
	42,000	Tanger Factory Outlet Centers, Inc.		1,477,140

		Total real estate investment trusts (Cost $5,987,205)		7,117,485

Units
		Reorganization Interests (0%)
	813,527	Penson Technologies LLC (c) (d) (Cost $ 0)		0

Shares
		Master Limited Partnerships (0.92%)
		Natural Gas Transmission (0.92%)
	40,000	Enterprise Products Partners LP (a) (b) (Cost $374,214)		1,317,200

		Preferred Stocks (1.53%)
		Financial (1.53%)
	79,469	Annaly Capital Management, Inc., 7.625% Series C		2,004,208
	7,473	Hatteras Financial Corp., 7.625% Series A		181,220
	80,000	Solar Cayman Ltd. (a) (c) (d)		0

		Total preferred stocks (Cost $2,515,814)		2,185,428

		Money Market Fund (0%)
	1,472	SSgA Money Market Fund, 7 day annualized yield 0.00%) (Cost: $1,472)		1,472

		Total investments (Cost $149,057,679) (120.42%)		172,420,654

		Liabilities in excess of other assets (-20.42%)		(29,235,047	)

		Net assets (100.00%)	$	143,185,607

(a) All or a portion of these securities have been segregated as collateral pursuant to the bank credit facility. As of
March 31, 2015, the value of securities pledged as collateral was $41,512,956.
(b) All or a portion of these securities were on loan pursuant to the bank lending agreement. As of March 31, 2015, the value of the securities on loan was $29,298,726.
(c) Non-income producing.
(d) Illiquid and/or restricted security that has been fair valued.
(e) These securities are exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These
securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

ADR		American Depositary Receipt
LLC		Limited Liability Company
LP		Limited Partnership
PLC		Public Limited Company

Notes to Schedule of Portfolio Investments (Unaudited)

Valuation of Investments

Portfolio securities are valued by various methods depending on the primary market or exchange on which they trade. Most equity securities for which the primary market is in the United States are valued at the official closing price, last sale price or, if no sale has occurred, at the closing bid price. Most equity securities for which the primary market is outside the United States are valued using the official closing price or the last sale price in the principal market in which they are traded. If the last sale price on the local exchange is unavailable, the last evaluated quote or closing bid price normally is used. Certain debt securities may be priced through pricing services that may utilize a matrix pricing system which takes into consideration factors such as yields, prices, maturities, call features, and ratings on comparable securities or according to prices quoted by a securities dealer that offers pricing services. Open end investment companies are valued at their net asset value. Securities for which market quotations are not readily available or reliable and other assets may be valued as determined in good faith by Bexil Advisers LLC, the Investment Manager, under the direction of or pursuant to procedures approved by the Fund’s Board of Trustees. Due to the inherent uncertainty of valuation, such fair value pricing values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. A security’s valuation may differ depending on the method used for determining value. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ from the net asset value that would be calculated using market prices. A fair value price is an estimate and there is no assurance that such price will be at or close to the price at which a security is next quoted or next trades.

Value Measurements

Inputs to valuation methods are prioritized by a three level hierarchy as follows:

• Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities including securities actively traded on a securities exchange.

• Level 2 - observable inputs other than quoted prices included in level 1 that are observable for the asset or liability which may include quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.

• Level 3 - unobservable inputs for the asset or liability including the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for investments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those securities.

The following is a description of the valuation techniques applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis:

Equity securities (common and preferred stock) – Most publicly traded equity securities are valued normally at the most recent official closing price, last sale price, evaluated quote, or closing bid price. To the extent these securities are actively traded and valuation adjustments are not applied, they may be categorized in level 1 of the fair value hierarchy. Equities on inactive markets or valued by reference to similar instruments may be categorized in level 2.

Corporate bonds and notes – The fair value of corporate bonds and notes are normally estimated using various techniques which may consider, among other things, recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. Although most corporate bonds and notes may be categorized in level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they may be categorized in level 3.

Restricted and/or illiquid securities – Restricted and/or illiquid securities for which quotations are not readily available or reliable may be valued with fair value pricing as determined in good faith by the Investment Manager under the direction of or pursuant to procedures approved by the Fund’s Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities may be valued by reference to comparable public entities or fundamental data relating to the issuer or both or similar inputs. Depending on the relative significance of valuation inputs, these instruments may be categorized in either level 2 or level 3 of the fair value hierarchy.

The following is a summary of the inputs used as of March 31, 2015 in valuing the Fund’s assets. Refer to the schedules of portfolio investments for detailed information on specific investments.

ASSETS		Level 1	Level 2	Level 3		Total
Investments, at value
	Common stocks	$ 158,926,823	$ -	$ 26,935	$ 158,953,758
	Corporate bonds and notes	-	2,845,311	-	2,845,311
	Real estate investment trusts	7,117,485	-	-	7,117,485
	Reorganization interests	-	-	0	0
	Master limited partnerships	1,317,200	-	-	1,317,200
	Preferred stocks	2,185,428	-	0	2,185,428
	Money market fund	1,472	-	-	1,472
Total investments, at value		$ 169,548,408	$ 2,845,311	$ 26,935	$ 172,420,654

There were no securities transferred from level 1 on December 31, 2014 to level 2 on March 31, 2015.

The following is a reconciliation of level 3 assets including securities valued at zero:

	Common Stocks		Reorganization Interests		Preferred Stocks		Total
Balance at December 31, 2014	$	26,935	$	0	$	0	$	26,935
Proceeds from sales		-		-		-		-
Realized gain (loss)		-		-		-		-
Transfers into (out of) level 3		-		-		-		-
Change in unrealized depreciation		-		-		-		-
Balance at March 31, 2015	$	26,935	$	0	$	0	$	26,935
Net change in unrealized depreciation attributable to assets still held as level 3 at March 31, 2015	$	-	$	0	$	0	$	-

The Investment Manager, under the direction of the Fund’s Board of Trustees, considers various valuation approaches for valuing assets categorized within level 3 of the fair value hierarchy. The factors used in determining the value of such assets may include, but are not limited to: the discount applied due to the private nature of the asset; the type of the security; the size of the asset; the initial cost of the security; the

existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer or analysts; an analysis of the company’s or issuer’s financial statements; or an evaluation of the forces that influence the issuer and the market in which the asset is purchased and sold. Significant changes in any of those inputs in isolation may result in a significantly lower or higher fair value measurement. The pricing of all fair value assets is normally reported to the Fund’s Board of Trustees.

The following table presents additional information about valuation methodologies and inputs used for assets that are measured at fair value and categorized as level 3 as of March 31, 2015:

March 31, 2015		Fair Value	Valuation Technique	Unobservable Input	Range
Common stocks
	Services – Miscellaneous Repair Services	$ 26,935	Share of taxable income and comparable exchange offer	Discount rate for lack of marketability	35%
Reorganization interests		$ 0	Cost; last known market value for predecessor securities; estimated recovery on liquidation	Discount rate for lack of marketability	100%
Preferred stocks
	Financial	$ 0	Most recently reported net asset value	Discount rate for lack of marketability	100%

Cost for Federal Income Tax Purposes

As of March 31, 2015, for federal income tax purposes, subject to change, the aggregate cost of securities was $149,057,679 and net unrealized appreciation was $23,362,975, comprised of gross unrealized appreciation of $29,677,319 and gross unrealized depreciation of $6,314,344. The aggregate cost of investments for tax purposes will depend upon the Fund’s investment experience during the entirety of its fiscal year and may be subject to changes based on tax regulations.

Illiquid and Restricted Securities

The Fund owns securities which have a limited trading market and/or certain restrictions on trading and, therefore, may be illiquid and/or restricted. Such securities have been valued using fair value pricing. Due to the inherent uncertainty of valuation, fair value pricing values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. Illiquid and/or restricted securities owned as of March 31, 2015 were as follows:

	Acquisition Date	Cost			Value
Aquilex Holdings LLC	3/08/12	$	496,372		$	26,935
Penson Technologies LLC	4/09/14		0			0
Solar Cayman Ltd.	3/07/07		568,802			0
Total		$	1,065,174		$	26,935
Percent of net assets			0.74	%		0.02	%

Market and Credit Risks

The Fund may invest in below investment grade fixed income securities (commonly referred to as "junk" bonds), which carry ratings of BB or lower by Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (“S&P”) and/or Ba1 or lower by Moody’s Investors Service, Inc. (“Moody’s”). Investments in these below investment grade securities may be accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities. The relative illiquidity of some of these securities may adversely affect the ability of the Fund to dispose of such securities in a timely manner and at a fair price at times when it might be necessary or advantageous for the Fund to liquidate portfolio securities.

Item 2. Controls and Procedures

(a)

The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b)

There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits

(a)	Certifications of the registrant's principal executive officer and principal financial officer as required by Rule 30a-2(a) under the 1940 Act.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dividend and Income Fund

By: /s/ Thomas B. Winmill

Thomas B. Winmill, President

Date: May 21, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Thomas B. Winmill

Thomas B. Winmill, President

Date: May 21, 2015

By: /s/ Thomas O'Malley

Thomas O'Malley, Chief Financial Officer

Date: May 21, 2015

EXHIBIT INDEX

(a) Certifications of the registrant's principal executive and principal financial officer as required by Rule 30a-2(a) under the 1940 Act. (EX-99.CERT)